GIFT  OF 


GENERAL  INFORMATION 

ON  THE' 

GEORGIA  C.  P.  A.  EXAMINATIONS 
and  TYPICAL  QUESTIONS 


EDITED  BY 
JOEL  HUNTER,  C.  P.  A. 


PRICE    ONE   DOLLAR 


ATLANTA,  GA. 

PRESS  OF  APPEAL  PUBLISHING  COMPANY 
January*  1913 


I 


GENERAL  INFORMATION  ON 

THE  GEORGIA  C.  P.  A. 

LAW. 

EDITED  BY  JOEL  HUNTER,  C.  P.  A. 

Certificates  are  granted  under  the  au- 
thority of  a  law  enacted  by  the  Legislature 
and  approved  by  the  Governor,  August 
17,  1908. 

The  examinations  are  conducted  by  a 
board  of  three  examiners,  consisting  of 
two  Certified  Public  Accountants  and  one 
Attorney.  The  examinations  are  held  on 
the  third  Wednesday  of  May  and  Novem- 
ber of  each  year.  The  present  Board  (1912) 
is  made  up  of  Messrs.  R.  W.  Jemison,  C.  P. 
A.,  of  Macon,  Joel  Hunter,  C.  P.  A.,  of  At- 
lanta, and  Hudson  Moore,  Esq.,  Attorney  at 
Law,  also  of  Atlanta.  Upon  the  recommen- 
dation of  this  board,  certificates  are  issued 
by  the  Governor  to  candidates  who  pass 
the  examinations.  Certificates  may  be  re- 
voked by  the  Governor,  for  sufficient  cause 
upon  the  recommendation  of  the  Board  of 
Examiners. 

Applicants  must  be  citizens  of  the 
United  States,  residing  and  having  an  of- 
fice for  the  regular  transaction  of  busi- 


6  General  Information  on  the 

ness  in  the  State  of  Georgia  and  must  be 
over  the  age  of  twenty-one  years,  and  of 
good  moral  character. 

Any  person  unlawfully  using  the  title 
"Certified  Public  Accountant''  or  the  ini- 
tials "C.  P.  A."  is  guilty  of  a  misdemeanor 
and  liable,  upon  conviction,  to  a  fine,  not 
exceeding  five  hundred  dollars  and  not  less 
than  two  hundred  dollars. 

All  applications  must  be  filed  with  the 
Board,  at  least  ten  days  before  the  date 
fixed  for  any  examination. 

A  grade  in  each  subject  of  at  least  sev- 
enty-five points,  out  of  a  possible  hundred 
points  will  be  necessary  to  pass  any  exam- 
ination. 


Georgia   C.  P.   A.   Examinations 


AN  ACT 

Passed  by  the  Senate  and  House  of  Represen- 
tatives and  Approved  by  the  Governor, 
August  17,  1908. 

To  ESTABLISH  A  BOARD  FOR  THE  EXAMINATION 
OF  ACCOUNTANTS,  TO  PROVIDE  FOR  THE 
GRANTING  OF  CERTIFICATES  TO  ACCOUNTANTS 
AND  TO  PROVIDE  A  PUNISHMENT  FOR  THE  VIO- 
LATION OF  THIS  ACT. 

Section  1.  Be  it  enacted  by  the  Senate  and 
House  of  Representatives  of  the  Common- 
wealth of  Georgia  in  General  Assembly  met 
and  it  is  hereby  enacted  by  the  authority  of  the 
same,  That  any  citizen  of  the  United  States  re- 
siding and  having  an  office  for  the  regular 
transaction  of  business  in  the  State  of  Georgia 
being  over  the  age  of  twenty-one  years  and  of 
good  moral  character  and  who  shall  have  re- 
ceived from  the  Governor  of  the  State  of  Geor- 
gia a  certificate  of  his  qualification  to  practice 
as  a  Public  Expert  Accountant  as  hereinafter 
provided,  shall  be  designated  and  known  as  a 
Certified  Public  Accountant,  and  no  other  per- 
son shall  assume  such  title  or  use  the  abbrevia- 
tion C.  P.  A.,  or  any  other  words,  letters  or  fig- 
ures to  indicate  that  the  person  using  the  same 
is  such  Certified  Public  Accountant.  Every 


8  General  Information  on  the 

person  holding  such  certificate,  and  every  co- 
partnership of  accountants,  every  member  of 
which  shall  hold  such  certificate  may  assume 
and  use  the  title  of  Certified  Public  Account- 
ants or  the  abbreviation  thereof  C.  P.  A.,  pro- 
vided that  no  other  person  or  co-partnership 
shall  use  such  title  or  abbreviation,  or  other 
words,  letters  or  figures  to  indicate  that  the  per- 
son or  co-partnership  using  the  same  is  such 
Certified  Public  Accountant. 

Section  2.  The  Governor  of  the  State  of 
Georgia  shall  appoint  a  board  of  three  exam- 
iners for  the  examination  of  persons  applying 
for  certification  under  this  Act.  Two  of  said 
examiners  shall  be  Public  Accountants  who 
shall  have  been  in  practice  for  at  least  five 
years,  one  of  whom  shall  be  appointed  for  the 
term  of  two  years,  and  one  for  the  term  of 
three  years,  and  upon  the  expiration  of  each  of 
said  terms  an  examiner  shall  be  appointed  for 
the  term  of  three  years,  and  after  the  year  One 
Thousand  Nine  Hundred  and  Eight,  these  two 
examiners  shall  be  Certified  Public  Accountants. 
The  other  examiner  shall  be  a  practicing  attor- 
ney in  good  standing  in  any  of  the  Courts  in 
the  State  of  Georgia,  who  shall  be  appointed 
for  the  term  of  two  years,  and  upon  the  expira- 
tion of  said  term  a  successor  shall  be  appointed 
for  the  term  of  three  years.  The  examination 


Georgia   C.  P.  A.  Examinations  9 

for  certificates  shall  be  based  upon  an  examina- 
tion in  Theory  of  Accounts,  Practical  Account- 
ing, Auditing,  Commercial  Arithmetic  and 
Commercial  Law.  Said  Examinations  shall 
take  place  twice  a  year  in  the  City  of  Atlanta, 
during  the  months  of  May  and  November  of 
each  year  under  such  rules  and  regulations  as 
may  be  adopted  by  the  board.  The  fees  pro- 
vided by  this  Act  shall  be  twenty-five  dollars 
for  each  applicant,  from  which  shall  be  paid 
the  expenses  incident  to  each  examination,  in- 
cluding stationery,  clerk  hire,  and  traveling  ex- 
penses of  the  Examining  Board.  The  results 
of  such  examinations  shall  be  certified  to  the 
Governor,  and  filed  in  the  office  of  the  Secretary 
of  State,  and  kept  for  reference  and  inspection 
for  a  period  of  not  less  than  five  years,  and  the 
Governor  to  issue  the  certificate. 

Section  3.  The  Governor  of  the  State  of 
Georgia  may  revoke  any  such  certificate  for  suf- 
ficient cause  upon  the  recommendation  of  the 
board  of  examiners,  who  shall  give  written  no- 
tice to  the  holder  thereof,  and  after  he  has  had 
a  hearing  thereon. 

Section  4.  The  board  of  examiners  may  in 
its  discretion  waive  the  examination  of  any  per- 
son who  shall  have  been  for  three  years  imme- 
diately preceding  the  passage  of  this  Act  prac- 
ticing in  the  State  of  Georgia  or  a  sister  State 


10  General  Information  on  the 

as  a  Public  Accountant,  and  who  shall  apply  in 
writing  for  such  certificate  within  three  months 
after  the  passage  of  this  Act. 

Section  5.  If  any  person  shall  hold  himself 
out  as  having  received  the  certificate  provided 
for  in  this  Act  or  shall  assume  to  practice  there- 
under as  a  Certified  Public  Accountant  or  use 
the  initials  C.  P.  A.  without  having  received 
such  certificate,  or  after  the  same  shall  have 
been  revoked,  he  shall  be  deemed  guilty  of  mis- 
demeanor, and  upon  conviction  thereof  shall  be 
sentenced  to  pay  a  fine  not  exceeding  Five  Hun- 
dred Dollars  nor  less  than  Two  Hundred  Dol- 
lars. 


Georgia   C.  P.  A.  Examinations          11 


STATE  OF  GEORGIA 

RULES 

OF 

EXAMINATION  FOR  C.  P.  A.  CERTIFICATE 
UNDER  THE  LAWS  OF  GEORGIA 

Approved  August  17th.  1908 

1. — Examinations  shall  include  questions  on: 
Commercial  Arithmetic,      (a) 
Theoretical  Accounting,      (b) 
Practical  Accounting.          (c) 
Auditing.  (d) 

Commercial  Law.  (e) 

2. — The  examination  will  take  approximately 

two  days  and  will  be  written. 
3. — The  answers  to  the  questions  in  all  subjects 
must  be  completed  within  the  time  allotted 
and  mentioned  on  the  paper  for  each  ex- 
amination. 

4. — All  answers  must  be  written  on  blanks  fur- 
nished by  the  examining  board  at  each  ex- 
amination. 

5. — The  writing  must  be  in  ink  and  legible. 
6. — The  board  will  not  be  responsible  for  mis- 
construing any  writing  which  may  be  diffi- 
cult to  decipher. 

7. — All  examination  papers  must  be  written  in 
accordance  with  the  instructions  given  prior 
to  each  examination. 


12  General  Information  on  the 

8. — The  examination  question  papers  cannot 
be  taken  away,  and  shall  remain  the  prop- 
erty of  the  board. 

9. — When  applicant  enters  the  examination 
room  he  will  be  handed  an  unsealed  en- 
velope containing  a  blank  card.  Upon  this 
card  applicant  writes  his  name,  and  the  ex- 
aminer in  charge  puts  a  number.  Appli- 
cant is  notified  of  his  number,  after  which 
the  envelope  is  sealed  and  filed. 

10. — The  applicant  is  then  handed  another  en- 
velope unsealed,  containing  the  examination 
questions.  These  he  will  answer  and  sign 
by  the  number  which  he  has  been  given.  At 
the  expiration  of  the  time  limit  he  will  en- 
close in  the  original  envelope,  the  printed 
questions  and  written  answers,  and  all 
memoranda  he  may  have  made,  seal  the  en- 
velope, and  hand  it  to  the  examiner  in 
charge. 

11. — Applicants  are  strictly  enjoined  from 
bringing  into  the  examination  room  any 
printed  or  written  matter,  blank  books, 
blank  paper  or  any  material  which  might 
be  referred  to  or  used  in  the  examination. 
Except  a  fountain  pen  or  its  equivalent 
(steel  pen  and  holder).  No  notes,  papers 
or  memoranda  of  any  kind  to  be  taken  out 
of  the  room. 


Georgia  C.  P.  A.  Examinations          18 

12. — A  candidate  to  pass  an  examination  must 
receive  seventy-five  points  in  each  subject. 

13. — The  marking  of  papers  shall  be  mainly 
governed  by  the  correctness  of  the  answers ; 
general  appearance  and  expression  will, 
however,  be  considered. 

14 — All  applications  shall  be  made  on  blanks 
provided  by  the  board,  accompanied  by  a 
fee  of  Twenty-five  Dollars,  and  filed  in  ac- 
cordance with  the  rules  and  regulations 
stated  herein,  and  at  least  ten  days  prior  to 
the  taking  of  an  examination. 

15. — Applicants  must  be  over  the  age  of  twenty- 
one  years  and  of  good  moral  character.  Per- 
sons convicted  of  a  felony,  misdemeanor,  or 
declared  by  any  Court  as  having  committed 
fraud  or  other  crimes,  shall  not  be  consider- 
ed as  of  good  moral  character. 

16. — Certificates  will  only  be  issued  to  those  ap- 
plicants who  furnish  positive  evidence  of 
good  moral  character,  and  the  Board  will 
judge  as  to  such  character  and  cannot  be 
compelled  to  divulge  the  reason  for  its  de- 
cision. 

17. — Ample  notice  will  be  given  to  each  appli- 
cant of  the  time  and  location  selected  for 
holding  the  examination,  and  each  one  must 
be  present  and  prepared  to  engage  in  his 
task  promptly  at  the  appointed  hour. 


14  General  Information  on  the 

18. — Failure  to  do  so  will  be  considered  as  suffi- 
cient cause  for  exclusion  from  attendance 
at  any  session  of  the  examination  when  once 
begun. 

1 9. — Any  applicant  failing  to  attend  at  the  open- 
ing of  any  subsequent  session  or  who  may 
be  excluded  for  tardiness  or  misconduct  will 
forfeit  the  amount  of  his  fee. 

20. — Applicants  must  appear  when  so  required 
before  the  Board  in  person  to  answer  any 
question,  or  produce  additional  evidence  re- 
quired by  the  Board  to  sustain  such  facts  as 
are  necessary  to  determine  the  qualifications 
prescribed  by  the  law. 

21. — The  Chairman  will  communicate  to  each  ap- 
plicant in  writing  the  decisions  reached  by 
the  Board  in  his  case,  but  in  no  event  will 
any  information  be  given  as  to  reasons 
leading  to  an  adverse  decision  to  anyone, 
nor  will  any  of  the  papers  be  accessible 
for  inspection  at  any  time. 

22. — The  act  of  filing  an  application  for  exami- 
nation shall  be  deemed  to  be  and  shall  con- 
stitute an  agreement  upon  the  part  of  the 
applicant  that  he  will  observe  and  conform 
to  the  requirements  expressed  in  these  rules, 
or  such  as  may  be  promulgated  hereafter. 


Georgia  C.  P.   A.  Examinations          15 


PRE-EXAMINATION  PAPERS 

For  the  purpose  of  carrying  out  the  C. 
P.  A.  law,  the  Georgia  Board  has  found  it 
necessary  to  provide  certain  blanks  for  the 
applicant  to  sign.  These  are: 

1 — Application  for  a  C.  P.  A.  Certificate. 

2 — Evidence  as  to  Age,  etc. 

3 — Certificates  of  Moral  Character 
(three  blanks) . 

On  the  pages  following,  copies  are  given 
of  each  of  these  blanks. 


Georgia  C.  P.  A.  Examinations          17 

STATE  OF  GEORGIA 
APPLICATION 

FOR  A 

CERTIFIED  PUBLIC  ACCOUNTANT'S 
CERTIFICATE 

To  the  Georgia  State  Board,  Examiners  of  Public 
Accountants,  Atlanta. 

Gentlemen: — I  desire  to  become  an  applicant  for  a 
C.  P.  A.  Certificate,  which  will  entitle  me  to  practice, 
and  be  styled  and  known  as  a  Certified  Public  Ac- 
countant under  the  rules  adopted  by  the  Board  in 
conformity  with  the  C.  P.  A.  Law  of  Georgia. 

I  enclose  you  herewith, 

1. — Required  evidence  as  to  age,  citizenship,  pre- 
liminary and  professional  education. 

2. — Three  Certificates  of  Moral  Character. 

8. — A  certified  check  for  $25.00  made  payable  to 
the  order  of  the  Georgia  State  Board  of 
Examiners  of  Public  Accountants. 

I  will  appear  before  your  Board  whenever  so  re- 
quested by  you  in  writing,  to  take  such  examination 
or  submit  such  additional  evidence  respecting  my 
qualifications  as  may  be  required,  or  answer  such 
questions  as  may  be  propounded  by  your  Board. 

Signature  of  Applicant 

P.  O.  Address  

Telephone  No. 
Date 


18  General  Information  on  the 


STATE  OF  GEORGIA 

Evidence  as  to  Age,  Citizenship,  Qualifi- 
cations, Etc. 

To  the  Georgia  State  Board,  Examiners   of  Public 
Accountants,  Atlanta. 

I  submit  for  your  consideration  the  following  evi- 
dence : 

1. — Full   name?   ~ 

2.— Date  and  place  of  birth?  

3.— A  citizen  of  the  United  States? 

4.— Residence  this  date? 

5. — How  long  a  resident  of  Georgia? 

6. — Office  or  place  of  business? 

7. — Present  business  or  occupation? „ 

8. — How  many  years  have  you  practiced  as  a  Pub- 
lic Accountant  on  your  own  account? 

9. — Have  you  ever  opened  and  closed  a  full  set  of 

books  of  an  extensive  business? If  so,  in 

what  lines  of  business  ? 

10. — Have  you  ever  conducted  an  independent 
audit?  If  so,  in  what  lines  of  busi- 
ness?   

11. — How  many  years  as  an  assistant  to  a  Pub- 
lic Accountant?  

12. — If  so,  give  names  of  Public  Accountants  you 
have  assisted?  

13. — Experience  in  the  study  or  practice  of  ac- 
counting (give  here  by  years  your  experience  in  the 
study  or  practice  of  accounting,  stating  how,  along 


Georgia  C.  P.  A.  Examinations          19 

what  lines,  and  where  employed  during  the  periods 
indicated). 

Prior  to  January  1st,  190 


During  190 ,  .... 

During  190.......    . 

During    190 ,   . 

During   190. ,   . 

14. — Have  you  read  the  full  text  of  the  law  and  are 
you  familiar  with  its  provisions  ? 

15. — Have  you  completed  any  of  the  courses  given 
by  Schools  or  Institutes  of  Commerce,  Accounts  and 
Finance  ?  If  so,  name  them - 


16. — Are  you  a  graduate  of  any  bookkeeping  or 
commercial  college?     If  so,  name  them 


17. — Give  any  other  general  information  which  may 
aid  the  Board  in  passing  on  your  qualifications. 


I  have  never  been  convicted  of  a  felony  or  misde- 
meanor or  declared  by  any  Court  of  competent  juris- 
diction to  have  committed  any  fraud.  I  am  not  ad- 


20  General  Information  on  the 

dieted  to  the  excessive  use  of  intoxicating  liquors  and 
am  of  good  moral  character. 

Signature  of  applicant  


STATE  OF  GEORGIA,  \ 

\  ss. 

County  of  .    I 

*  J 

Undersigned,  being  duly  sworn,  says  that  the  state- 
ments contained  in  the  foregoing  seventeen  questions 
and  answers  are  true. 


Subscribed  and  sworn  to  before  me  this  

day  of  A.  D.  190... 

My  commission  expires  


Notary  Public. 


Georgia   C.  P.  A.  Examinations          21 


STATE  OF  GEORGIA 

CERTIFICATE  OF  MORAL  CHAR- 
ACTER 

To  the  Georgia  State  Board,  Examiners  of  Public 
Accountants,  Atlanta. 

This  is  to  certify  that  I,  the  undersigned,  am  per- 
sonally acouainted  with ~.~. 

and  that  to  my  knowledge 

he  has  never  been  convicted  of  a  felony  or  misde- 
meanor, or  declared  by  any  Court  of  competent  juris- 
diction to  have  committed  any  fraud.  I  know  him  to 
be  of  good  moral  character,  and  also  to  be  a  good 
citizen,  recommending  him  as  entirely  worthy  to  be- 
come a  Certified  Public  Accountant  should  he  meet 
the  requirements  as  to  knowledge  and  experience  pre- 
scribed by  your  board. 

I  am  willing  to  answer  any  questions  you  may  ask 
in  regard  to  the  applicant  hereinabove  mentioned, 
and  will  treat  the  same  as  strictly  confidential. 

I  have  known  the  above  applicant  for  the  C.  P.  A. 
degree  for  years. 

Signature    ~ 

Business    _ 

P.  O.  Address  

NOTE: 

Three  of  these  certificates  should  be  signed  by  sub- 
stantial and  representative  commercial  men,  well 
known  in  the  State  of  Georgia  and  residents  of  the 
State.  None  of  these  parties  should  be  a  relative  of 
the  applicant,  or  should  maintain  any  financial  or 
business  relations  with  the  applicant,  except  that  of 
a  client  or  employer. 


SCOPE  OF  THE  EXAMINATION 
IN  EACH  SUBJECT 


Georgia  C.  P.  A.  Examinations          25 


COMMERCIAL  ARITHMETIC. 

This  subject  has  been  selected  to  serve 
as  an  index  to  the  candidate's  preliminary 
business  education.  Questions  are  given 
in  Percentage,  Interest  and  Discount,  Ra- 
tio and  Proportion,  Equation  of  Payments, 
Complex  Problems,  Standard  Short  Meth- 
ods and  Bookkeeping. 

BOOKS  RECOMMENDED. 

New  Higher  Arithmetic,  Robinson. 
New  Commercial  Arithmetic.  Moore. 
Practical  Arithmetic,  Williams  &  Rogers. 
High  School  Arithmetic,  Wentworth  &  Hill. 
Commercial  Arithmetic,  Bryant  &  Stratton. 
Commercial  Arithmetic,  Cornell  &  Holt. 


26  General  Information  on  the 


THEORETICAL  ACCOUNTING. 

The  Theory  of  Accounting  is  that  knowl- 
edge of  the  correct  underlying  principles 
of  accounting,  which  will  enable  one  to  ap- 
ply it  practically.  The  accountant  is  called 
upon  at  times  to  append  a  certificate  to  a 
balance  sheet  of  a  corporation.  Among  the 
best  forms  of  certificates  may  be  consid- 
ered the  following : 

This  statement  is  prepared  so  as  to  pre- 
sent an  accurate  view  of  the  Company's 
affairs,  is  in  agreement  with  the  books  and 
sets  forth  its  true  financial  condition. 

Thus  it  may  be  seen,  that  a  Balance 
Sheet  may  be  drawn  up  so  as  to  disclose 
the  truth  in  totals,  but  not  be  prepared  in 
such  style  as  to  present  an  accurate  view 
of  the  Company's  affairs. 

BOOKS   RECOMMENDED   ARE: 

Improved  Bookkeeping,  Goodwin. 

Bookkeeping  and  Accountancy,  Rowe. 

Factory  Accounting,  Garcke  &  Fells. 

Modern  Accounting,  Hatfield. 

Science  of  Accounts,  Bentley. 

Philosophy  of  Accounts,  Sprague. 

Accounting  in  Theory  and  Practice,  Lisle. 

Accounts  of  Executors,  Hardcastle. 


PRACTICAL  ACCOUNTING 


Georgia   C.  P.  A.   Examinations          29 


PRACTICAL  ACCOUNTING 

The  applicant  is  expected  to  have  a  thor- 
ough knowledge  of  the  theory  and  appli- 
cation of  accounts,  the  various  forms  of 
business  organization  and  the  methods  of 
administration  under  which  they  are  con- 
ducted, and  to  be  prepared  to  examine  and 
report  upon  all  matters  relating  to  ac- 
counts and  accounting  practice. 

Under  this  head,  questions  may  be  asked 
upon  the  following  subjects: 

BANKING  AND  FINANCIAL. 

(a)  National  banking  System. 

(b)  State  Banks  in  Georgia. 

(c)  Savings  Banks  and  Building  and  Loan  Asso- 
ciations in  Georgia. 

(d)  Trust  Companies  in  Georgia. 

(e)  Private  Bankers  and  Brokers. 

(f)  Foreign  Exchange. 

(g)  Clearing  Houses. 

(h)     Loan  and  Investment  Companies. 

INSURANCE — LIFE,,  FIRE,  MARINE,,  ACCIDENT,  FIDELITY 
AND  OTHER  FORMS  OF  INSURANCE. 

Principles  of  Insurance. 

Organization  of  (1)  Stock  Companies,  (2)  Mutual 
Companies. 

Accounting  Organization  and  Administration. 

Reserves,  Income  Accounts,  Balance  Sheets, 
Audits. 


30  General  Information  on  the 

MANUFACTURING. 

(a)  Accounting  Organization  and  Administration 
of  factories. 

(b)  Financial  Accounts. 

(c)  Manufacturing  Costs. 

(d)  Audits. 

TRANSPORTATION. 

(a)  Steam  Railways. 

(b)  Street  Railways. 

(c)  Water  Transportation  and  Docks. 

(d)  Express  Companies. 

Accounting  organization  and  administration  of — 
Capital  accounts.  Revenue  and  Operating  accounts. 
Balance  Sheets.  Audits. 

PUBLIC   UTILITIES. 

(a)  Gas  and  Heating. 

(b)  Electric  Light  and  Power. 

(c)  Telephone  and  Telegraph. 

(d)  Water  Works. 

SELLING. 
Accounting    organization    and    administration    of — 

(a)  Wholesale.     Manufacturing. 

(b)  Retail.     Distribution. 

(c)  Financial  Accounts  of  Selling  Organizations. 

(d)  Stock  and  Cost  Records. 

(e)  Audits. 

MINING. 

(a)  Accounting  organization  and  Administration 
of  a  Mining  Company. 

(b)  Financial  accounts  of  mining  companies. 

(c)  Mining  Costs. 

(d)  Audits. 


Georgia  C.  P.  A.  Examinations          31 

GOVERNMENTAL. 

(a)  The   distinction  between  public   and   private 
Companies. 

(b)  Revenue  and  Expenditure. 

(c)  Appropriations. 

(4)     Funds,  Special  and  General. 

(e)  Balance  Sheets. 

(f)  Audits. 

LEGAL. 

Correct    preparation    and    presentation    of    State- 
ments of  Accounts  in  litigated  cases. 


32  General  Information  on  the 

BOOKS  RECOMMENDED. 

Perhaps  the  best  course  of  study  to  pre- 
pare for  an  examination  in  practical  ac- 
counting is  to  solve  the  problems  submitted 
by  the  C.  P.  A.  Boards  of  other  States. 
These  may  be  had  by  subscribing  to  the 
Journal  of  Accountancy,  32  Waverly 
Place,  New  York  City,  and  Greendlinger's 
Accountancy  Problems,  Business  Book  Bu- 
reau, 13  Astor  Place,  New  York  City. 

(Other  books  recommended  may  be 
found  under  Auditing.) 


Georgia  C.  P.  A.  Examinations          33 


AUDITING. 

Webster  defines  "audit"  in  the  words 
"to  examine  and  adjust."  This  limited 
definition  shows  that  a  simple  examination 
of  figures  recorded  does  not  cover  the 
whole  scope  of  an  audit.  Even  from  books 
not  properly  kept,  the  experienced  auditor 
is  enabled  to  discover  the  omission  of  en- 
tries that  should  have  been  made. 

After  being  thoroughly  grounded  in 
Commercial  Arithmetic,  Business  Organi- 
zation and  Procedure,  with  the  Theory  of 
Accounts  properly  applied  in  Practical  Ac- 
counting, the  student  is  then  prepared  to 
take  up  successfully  the  great  subject  of 
auditing,  which,  as  understood  by  the 
modern  accountant,  is  one  of  great  breadth 
and  scope. 

In  preparing  himself  for  the  examina- 
tion on  this  subject,  the  student  should 
make  a  careful  study  of  its  best  literature. 
Among  others,  the  following  books  are 
recommended : 

Accounts,  their  Construction  and  interpretation 

Cole 

Advanced   Accounting  Dicksee 

Auditors,  their  Duties  and  Responsibilities Pixley 


34  General  Information  on  the 

Auditing   (American  Edition)   Dicksee 

Auditing  Montgomery 

Corporation  Finance  and  Accounting Bentley 

Corporation  Accounting  and  Law Rahill 

Depreciation  of  Factories   Matheson 

Depreciation,  Reserve  and  Reserve  Funds Dicksee 

Factory  Organization  and  Costs Nicholson 

Funds  and  their  Uses  Cleveland 

Goodwill  and  its  Treatment  in  Accounts Dicksee 

Modern  Banking  Methods  Barrett 

Modern  Trust  Co Sterrett 

Partnership    Accounts   Child 

Practical  Accounting  Wolff 

Practical   Auditing  Renn 

Practical  Cost  Accounting  Wood 


Georgia   C.  P.  A.  Examinations          35 


COMMERCIAL  LAW. 

The  student  should  be  well  grounded  in 
those  branches  of  Commercial  Law  that 
relate  to  the  work  usually  undertaken  by  a 
public  accountant.  Thus,  he  should  be  fa- 
miliar with  the  Georgia  Law  in  its  relation 
to  the  rights  and  duties  of  shareholders  in 
a  corporation  and  of  the  scope  and  powers 
of  directors.  He  should  know  the  legal 
difference  between  partnerships  and  cor- 
porations. What  constitutes  partnerships 
where  the  rights  of  creditors  are  con- 
cerned. The  law  of  contracts.  The  laws 
relating  to  State  banks.  The  relationship 
of  principal  and  surety. 

The  law  on  negotiable  paper,  including 
Bills  of  Lading. 

The  student  is  expected  to  have  such  a 
knowledge  of  the  law  relating  to  frauds  or 
other  crimes  arising  out  of  business  rela- 
tions as  can  be  obtained  by  careful  study 
of  text  books  on  the  subject. 

He  should  have  a  working  knowledge  of 
laws  concerning  Real  Estate  and  Personal 
Property,  of  the  law  governing  Receiver- 
ship, Bankruptcies  and  the  Administration 
of  Estates. 


36  General  Information  on  the 

It  is  to  be  borne  in  mind  that  the  ac- 
countant is  to  acquire  such  knowledge  of 
Commercial  Law  as  affects  Accountancy. 
Keeping  this  point  in  view  will  enable  him 
to  determine  where  his  responsibility  ends 
and  the  advice  of  a  practicing  attorney 
should  be  sought. 

The  practicing  accountant  will  find  it 
much  to  his  advantage  to  study  in  the 
Codes  of  those  States  in  which  he  prac- 
tices, the  subjects  in  which  he  is  inter- 
ested. The  Georgia  Code  is  considered  to 
be  particularly  valuable  in  the  elucidation 
of  the  underlying  principles  of  Common 
Law. 

The  following  books  are  recommended: 

Georgia  Bankers'  Code  Park 

Commercial  Law  Curtis-Gano 

Commercial    Law    „ Huffcut 

Commercial  Law  Spencer 

American  Corporations  Sullivan 

American   Business   Law   Sullivan 

Manual  of  Elementary  Law  Fishback 

Law  of  Mortgages  Jones 

Law  of  Contracts  Anson 

Law  of  Agency  Mechem 

Sureties   and  Guarantors  Baylies 

Law  of  Insurance  Biddle 

Law  of  Partnership  Parsons 

Public   Corporations    Beach 

Law  of  Bankruptcy  Collier 

Bills,  Notes  and  Checks  Bigelow 


QUESTIONS  SET  BY  GEORGIA  BOARD 

OF  EXAMINERS  SELECTED  FROM 

VARIOUS  EXAMINATIONS. 


Georgia  C.  P.  A.  Examinations          39 


QUESTIONS  SET  BY  GEORGIA  BOARD 

OF  EXAMINERS  SELECTED  FROM 

VARIOUS  EXAMINATIONS. 

THEORY  OF  ACCOUNTS. 

1.  What  should  be  done  regarding  the  books 
on  the  admission  of  a  new  partner  into  a  firm? 
What  entry  should  be  made   (a)   when  Cash  is 
invested  for  a  certain  share  in  the  gains  and 
losses   (b)   when  a  specified  amount  is  paid  to 
the  old  members  for  a  certain  share  in  the  gains 
and  losses  ? 

2.  Define  the  following  terms  as  applied  to 
Accounts:    Personal,   Real,  Nominal,   Resource, 
Liability.     Mention  two  real  and  three  nominal 
accounts. 

3.  State  generally  how  the  books  of  a  firm 
doing    a    manufacturing   business    would    differ 
from  those  kept  by  a  trading  concern  as  to  (a) 
Books  of  Record,  (b)  Ledger  Accounts. 

4.  Suggest  one  or  more  plans  by  which  an 
inventory  may  be  corroborated  or  impeached. 

5.  Describe  a  method  of  keeping  accounts 
so  that  the  aggregate  sums  due  from  customers 
and  due  to  creditors  can  be  known  without  pre- 
paring a  schedule  of  the  accounts  of  such  cus- 
tomers and  creditors,  and  so  that  an  indepen- 


40  General  Information  on  the 

dent  balance  of  the  ledger,  containing  only  the 
real,  nominal,  special  and  controlling  accounts, 
exclusive  of  the  individual  accounts  of  custom- 
ers and  of  trade  creditors,  may  be  taken. 

6.  Define    the     following:     (a)  stock,     (b) 
capital,  (c)  surplus,  (d)  deficiency,  (e)  capital 
stock,   (f)   preferred  stock,   (g)   common  stock, 
(h)  share  capital,  (i)  loan  capital. 

7.  Describe  the  nature  of  the  following  ac- 
counts:   (a)  merchandise,  (b)  construction,  (c) 
consignment,  (d)  joint,  (e)  subscription,  (f)  ex- 
pense,   (g)    maintenance,   (h)    venture,    (i)    sus- 
pense, (j)  dividend. 

8.  Describe  the  process  of  changing  single 
entry  books  to  double  entry.     What  additional 
accounts  are  required?     Is  it  necessary  to  dis- 
turb any  accounts  already  opened  in  the  ledger, 
or  to  keep  such  accounts  differently  after  the 
change  ? 

9.  How  should     executors'  and  administra- 
tors' accounts  be  stated  for  the. purpose  of  filing 
in  court?     What  does  the  summary  of  accounts 
usually  include  ?    What  are  assets  of  the  estate  ? 
When   are  dividends,  interest  and  rents  to  be 
treated  as   principal?      Define   an  intermediate 
account.     What  is  a  final  account?     With  what 
does   the   executor  charge  himself?      For   what 
does  he  take  credit? 


Georgia   C.  P.  A.  Examinations          41 

*     10.     Formulate  and  explain  a  rule  for  deter- 
/  j  mining  whether   an   account   should  be   debited 
I  or  credited  in  any  given  transaction.     Explain 
the  application  of  the  principle. 


PRACTICAL  ACCOUNTING 


Georgia  C.   P.  A.  Examinations          45 

PRACTICAL  ACCOUNTING. 

PROBLEM  No.  1, 

No.  1.  The  following  is  the  Trial  Bal- 
ance and  Inventory  of  the  Georgia  Cotton 
Oil  &  Manufacturing  Co.,  as  at  June  9, 
1909.  The  books  were  closed  last,  June  16, 
1908. 

TRIAL  BALANCE  JUNE  9,  1909. 

Dr.  Cr. 

Plant   $50,552.30 

Real  Estate  2,500.00 

Stinson   Gin   Building   2,653.45 

Office    Fixtures    242.73 

Cash  on  Hand  and  in  Banks  2,324.91 

Accounts    Receivable    1,002.18 

Cotton  Seed,  4,828,832  Ibs 42,185.68 

Mill    Labor    „ 3,050.76 

Salaries   2,069.41 

Fuel   2,282.46 

Interest,  Exchange  and  Disc 1,113.31 

Press    Cloth    1,622.94 

Meal   Bags 943.83 

Taxes    597.50 

Mill   Expenses  519.23 

Hull    Sacks    194.26 

Office  Expense  97.63 

Telegraph  and  Telephone 84.70 


Carried  Forward  $114.037.27 


46 


General  Information  on  the 


Brought  Forward  $114,037.27 

Traveling    „ 68.54 

Insurance    _ 150.08 

Lubricating  Oil  131.92 

Repairs   and  Supplies  655.20 

Oil     Inventory,     6-15-08,    35,357 

Gals „ 1,725.00 

Meal    Inventory,   6-15-08,   82,000 

Ibs 1,027.00 

Hulls  Inventory,  6-15-08,  136,000 

Ibs ~ - 408.00 

Linters  Inventory,  6-15-08,  7,418 

Ibs    111.28 

Loss  by  Burglary  9.82 

Capital  Stock  $50,000.00 

Accounts  Payable  273  24 

Oil  Sales,  812,167  Ibs 33,964.19 

Meal  Sales,  1,987,600  Ibs 23,475.06 

Hull  Sales,  1,665,246  Ibs 4,684.01 

Linter  Sales,  183,610  Ibs 1,421.78 

Receipts     from     Standard     Gin 

Co _ 112.88 

Receipts     from     Farmers'     Gin 

Co 734.40 

Receipts  from  Storage  _  1,203.01 

Profit  and  Loss  2,455.04 

$118,323.61  $118,323.61 
INVEXTOMES   JUNE   9,   1909. 

Meal,   68,500   Ibs _ $976,12 

Hulls,   73,500  Ibs 220.50 

Linters,   4,343   Ibs „ - 86.86 

Seed,  3,920  Ibs - 34.22 


Georgia   C.  P.  A.  Examinations          47 

Hull    Sacks    10.70 

Fuel  30.00 

Supplies   and   Repairs   539.15 

"Warehouse  storage  accrued  to  June  9th  amounted 
to  $748.22. 

You  are  requested  to  extract  from  this 
data  a  Balance  Sheet  and  a  Statement  of 
Expenses  and  Earnings  from  June  16, 
1908,  to  June  9,  1909,  showing  the  average 
cost  per  ton  of  Seed  worked  for  every  pur- 
chase, material  and  Expense  Account,  av- 
erage price  per  ton,  pound  or  gallon  re- 
ceived for  the  total  Sales  of  product,  cost 
per  ton  of  Seed  worked,  working  cost, 
then  total  prime  and  working  cost  and 
price  (per  ton  of  Seed  worked)  received  for 
Product  Sold.  Show  profits  per  ton  on  the 
crushing  operations  and  Receipts  from 
other  Income  separately.  Show  also  the 
yields  in  pounds  (7  1-2  Ibs.  Crude  Oil  to 
Gallon)  for  each  of  the  four  products,  Oil, 
Meal,  Hulls  and  Linters,  and  show  the  av- 
erage yield  in  pounds  for  the  four  products 
per  ton  of  Seed  crushed. 

You  are  also  requested  to  make  such 
comment  on  these  Costs  as  may  seem  nec- 
essary. 


48  General  Information  on  the 

PRACTICAL  ACCOUNTING. 

PROBLEM  No.  2. 

No.  2.  From  the  accompanying  Trial 
Balance  and  Inventories  of  the  Blankville 
Cotton  Mills  you  are  requested  to  prepare 
a  Balance  Sheet  and  statements  of  Manu- 
facturing Cost,  Selling  Expenses  and  In- 
come Account.  The  books  were  closed  pre- 
viously at  August  31,  1908.  In  the  twelve 
months  ended  August  31,  1909,  they  have 
produced  1,372,428  Finished  Cloth  and 
161,906  Ibs.  Visible  Waste.  In  addition  to 
the  financial  and  manufacturing,  etc., 
statements,  you  are  also  requested  (a)  to 
find  the  prime  cost  of  cotton  consumed  per 
lb.,  (b)  the  increase  in  this  pound  price  by 
reason  of  Waste  made,  less  money  received 
from  Sales  of  Waste,  (c)  the  cost  of  the 
Cotton  in  the  finished  cloth  per  pound,  (d) 
the  cost  to  manufacture  per  pound,  (e)  to- 
tal raw  material  and  manufacturing  cost, 

(f )  Gross  selling  price  per  pound  of  goods 
made  and  sold  (include  Inventory  in  this), 

(g)  Selling  Expenses  per  pound,  (h)  gross 
profit  on  sales,  (i)  Other    Expenses    per 
pound,  (j)  profit  or  loss  per  pound  on  man- 
ufactured cloth. 


Georgia   C.  P.  A.  Examinations          49 


BLANKVILLE   COTTON   MILLS   TRIAL   BALANCE   AUGUST 
31sT,  1909. 


Dr. 

Machinery  $118,514.99 

Real   Estate   48,774.48 

Office   Fur.   and   Fixtures..... 390.89 

Unsold  Stock  (in  Treasury )......  1,650.00 

Accounts  Receivable - 33,498.66 

Cash  in  Bank  and  on  Hand 7,744.68 

Advances  to  Hands 307.28 

Starch    1,859.85 

Burlap  and  Rope  1,198.19 

Insurance    and   Taxes    3,299.42 

Salaries    5,100.00 

Repairs    _ 481.64 

Discounts  and  Commissions  ......  11,897.62 

Freight    5,623.57 

Tallow   859.55 

Wages    31,767.27 

Supplies    7,846.34 

Expense    1,435.56 

Oil    400.28 

Fuel   5,339.75 

Discount  and  Interest  8,790.49 

Inventories,  8-31-08: 

Raw  Cotton,  92  B-C,  87,149 

Ibs 4,134.68 

Stock     in     Process,     45,739 

Ibs 6,960.83 

Finished  Goods,  123,373  Ibs.  20,114.35 

Waste,  16,134  Ibs 591.36 


Cr. 


Carried  Forward 


50  General  Information  on  the 

Brought  Forward  $328,581.73 

Cotton  Purchased,  3,161  Bales, 

1,584,318    Ibs ; 148,919.42 

Capital  Stock  $80,000.00 

Bond    Account    40,000.00 

Bills  Payable  77,576.73 

Accounts  Payable  11,154.66 

Dividend    Account    3.50 

Sales,   1,435,376   Ibs 228,992.62 

Waste,  96,597  Ibs 2,618.62 

Outside    Warehouse     Storage 

Receipts    2,023.70 

Rent  Operatives'   Houses   1,069.07 

Undivided  Profits,  August  31, 

1908    34,062.25 


$477,501.15    $477,501.15 

N.  B. — Inventories  September  1,  1909: 

Raw   Cotton,   170   Bales   86,700  Ibs $9,970.50 

Cotton  in  Process,  46,172  Ibs 6,123.70 

Finished   Goods,   56,556   Ibs ,  9,457.85 

Goods    Consigned    2,392.40 

Waste    . 1,863.83 

General    Supplies    _. 2,916.85 

Fuel 265.50 

Starch    „ 678.35 

August  31,  1909,  there  was  an  amount  of  Unearned 
Insurance,  $892.70.  Also  accrued  charges  of  wages, 
$550.00,  Commissions  $1,812.54,  interest  $315.74  and 
taxes  $700.00. 


Georgia  C.  P.  A.  Examinations          61 

PRACTICAL  ACCOUNTING. 
PROBLEM  No.  3. 

No.  3.  The  following  trial  balance  is 
handed  you,  with  the  request  that  you  pre- 
pare a  revenue  account  and  a  balance 
sheet : 

A  B's  Capital $20,000.00 

A  B's  Personal  Account  $1,000.00 

Bank    of    North   America    600.00 

Cash  in  hand  90.00 

Merchandise    account    8,600.00 

Repair  account  87.50 

Bills   Receivable   6,400.00 

Bills  Payable  4,000.00 

Real  Estate  1,350.00 

Bank    Stock    1,566.00 

General  Expenses  1,860.00 

Freight    1,000.00 

Accounts   Receivable  8,000.00 

Accounts  Payable  10,000.00 

Profit   and   Loss   3,446.50 


$34,000.00  $34,000.00 

If  all  the  information  required  is  not  pre- 
sented in  this  trial  balance,  supply  what  is 
wanting  and  submit  the  statements  called  for. 


52  General  Information  on  the 

PRACTICAL  ACCOUNTING. 

PROBLEM  No.  4. 

No.  4.  The  trial  balance  of  a  manu- 
facturing firm  taken  January  1,  1897,  is 
as  follows: 

Capital     A     $40,000.00 

Capital  B  20,000.00 

Plant   and   Machinery  $35,000.00 

Purchases    38,000.00 

Sales    95,000.00 

Stock  on  hand  Jan.   1,   1896 15,000.00 

Labor    24,000.00 

Salaries 6,000.00  k 

Traveling    Expenses 2,500.00  ^ 

Interest 600.00 

Stationery  and  Printing  1,200.00  -. 

Rents   and   Taxes   3,500.00  - 

Discounts  and  Allowances  1,250.00 

Fuel „ 8,000.00 

Insurance  (1  year  from  7-1-96)...     1,150.00   - 

Freight    „ 1,500.00  " 

General  Expenses  600.00 

Bank   Overdraft   5,000.00 

Creditors  4,000.00 

Accounts   Receivable   25,000.00 

Rent  of  Steam  Power  1,500.00 

Cash  on  hand  „ 200.00 

Loan  account  7,000.00 


$165,500.00  $165,500.00 


Georgia  C.  P.  A.  Examinations          53 

Stock  on  hand  January  1,  1897,  $23,000 ; 
each  partner  to  be  credited  6  per  cent,  on 
his  capital  for  one  year  before  profits  are 
ascertained;  3  per  cent,  to  be  written  off 
book  debts  for  discount ;  10  per  cent,  to  be 
written  off  machinery  and  plant  for  depre- 
ciation; unexpired  insurance  to  be  taken 
into  account ;  net  profit  to  be  divided  2-3  to 
A  and  1-3  to  B.  Draft  journal  entries  for 
closing  books  and  prepare  final  balance 
sheet  and  profit  and  loss  account. 


COMMERCIAL  LAW 


Georgia  C.  P.  A.  Examinations          57 


COMMERCIAL  LAW. 

1.  (a)     What  is  a  corporation? 

(b)  What  are  the  general  powers 
of  a  board  of  directors  of  a  corporation  and 
what  are  its  general  duties  ? 

2.  (a)     Give  briefly  the  substance  of 
the  Federal  Corporation  Tax  Law  and  its 
various  essential  provisions. 

(b)  Prepare  correct  returns  of  a 
manufacturing  corporation,  supplying  fig- 
ures and  data  in  compliance  with  the  Fed- 
eral Corporation  Tax  Law. 

3.  (a)     To  what  extent  is  a  stockhold- 
er liable  for  the  debts  of  an  insolvent  cor- 
poration? 

(b)  To  what  extent  is  a  partner  lia- 
ble for  the  debts  of  an  insolvent  partner- 
ship? 

(c)  Assuming  that  you  are  one  of 
six  shareholders  in  a  corporation  where  the 
stock  is  fully  paid  up,  the  capital  being 
$120,000.00,  assuming  that  you  are  also  a 
partner  in  a  firm  where  the  total  invest- 
ment is  $120,000.00,  equally  divided  among 
six  persons ;  both  concerns  fail  and  can  pay 
only  50  cents  on  the  dollar  of  their  indebt- 


58  General  Information  on  the 

edness;  two  of  the  stockholders  are  dead 
and  insolvent,  and  likewise  two  of  the 
partners  are  dead  and  insolvent,  what  is 
your  partnership  liability  and  what  is  your 
liability  as  a  stockholder? 

4.  (a)     What  is  the  liability  of  a  stock- 
holder of  a  bank  to  its  general  creditors, 
and  what  is  his  liability  to  the  bank's  de- 
positors ? 

(b)  How  much  is  a  State  bank 
permitted  to  lend  any  one  person,  and  what 
is  required  when  a  State  bank  loans  money 
to  one  of  its  officers? 

5.  (a)     For  what  purposes  and  how 
long  may  National  banks  acquire  and  hold 
real  estate? 

(b)  What  portion  of  its  net  profits 
must  be  carried  to  the  Surplus  fund,  and 
when,  by  a  National  Bank? 

6.  (a)     What  are  the  general  duties 
and  liabilities  of  an  executor  or  adminis- 
trator of  an  estate? 

(b)  What  is  a  specified  legacy,  and 
what  constitutes  the  residuum  of  an  es- 
tate? 

(c)  What  compensation  are  execu- 
tors and  administrators  entitled  to  receive 
for  their  services? 


Georgia   C.  P.  A.  Examinations          59 

7.  (a)     What  are  considered  words  of 
negotiability  ? 

(b)  What  is  understood  by  the 
words  "without  recourse"  when  accom- 
panying an  endorsement? 

8.  (a)     What  is  a  bill  of  lading?  What 
do  bills  of  lading  represent  ?    To  what  ex- 
tent are  they  negotiable  ? 

9.  (a)     Give    the    various    acts    and 
omissions  which  will  prevent  a  bankrupt 
from  obtaining  a  discharge  in  bankruptcy 
from  the  payment  of  his  debts. 

(b)  What  are  the  various  obliga- 
tions from  which  a  bankrupt  is  not  relieved 
by  a  discharge  in  bankruptcy  ? 

10.  (a)     What  is  the  penalty  for  using 
the  terms  "C.  P.  A."  without  having  first 
received  the  proper  certificate? 

(b)  What  are  the  elements  involved 
in  the  crime  of  having  fraudulently  ob- 
tained credit,  and  what  is  the  punishment 
therefor  ? 

(c)  From  what  funds  only  can  divi- 
dends be  declared  by    State  banks,    and 
what  are  the  consequences  of  declaring 
dividends  from  other  sources? 

(d)  Define  "false  entries"  when  ap- 
plied to  a  National  Bank ;  and  what  are  the 
consequences  of  such  an  act  ? 


AUDITING 


Georgia  C.  P.  A.  Examinations          63 


AUDITING. 

1.  How  would  you  determine  the  profits 
for  a  given  period  from  a  set  of  books  kept 
on  the  single  entry  system,  the  capital  at 
the  beginning  of  the  period  being  known? 

2.  In  the  construction  of  a  large  build- 
ing the  proprietors  issue  $800,000  20-year 

6  per  cent,  bonds  which  are  disposed  of  to 
the  contractors  at  85  per  cent,  of  their  face 
value.     You  find,  upon  examination,  that 
the    discount  of  15  per    cent,  has    been 
charged  to  Construction    Account  in    the 
first  place,  and  then  into  Building  Account. 
State  whether  you  consider  the  final  entry 
legitimate  or  not,  and  give  reasons. 

3.  You  are  elected  the  auditor  of  a  cor- 
poration by  the  holders  of  both  common 
and  preferred  stock,  and  it  is  your  duty  to 
safeguard  the  interest  of  both  classes  of 
stockholders.    The  preference  stock  bears 

7  per  cent,  and  is  non-cumulative.    Mention 
what  precaution  you  would  adopt  to  safe- 
guard   the    interests    of    the   preference 
shareholders,  giving  reasons  therefor. 

4.  Explain  the  various  measures  which 
you  would  adopt  to  verify  whether  or  not 
all  cash  received  has  been  duly  accounted 


64t  General  Information  on  the 

for  on  the  books  of  the  concern  you  were 
auditing. 

5.  A    corporation    has  sold    its    first 
mortgage  bonds  at  a  premium  and  its  sec- 
ond mortgage  bonds  at  a  discount.    How 
should  the  premium  and  discount  be  dealt 
with  on  the  books  ? 

6.  After  auditing  the  books  of  a  man- 
ufacturing company  for  a  period  of  ten 
years  you  are  asked  to  give  a  certificate  as 
to  the  net  earnings  of  the  business    for 
those  ten  years  for  the  purpose  of  a  sale 
based  on  the  earning  capacity  of  the  prop- 
erty.   What  items  of  expense  heretofore 
charged  annually  through  the  Profit  and 
Loss  Account  may  be  properly  eliminated 
in  the  preparation  of  your  certificate ;  and 
why? 

7.  Describe  in  detail  the  method  that 
should  be  used  to  verify  the  securities  rep- 
resenting the  investments  of  a  company 
under  audit,  in  the  case  of  (a)  Real  Estate, 
(b)  Mortgages  on  Real  Estate,  (c)  Certifi- 
cates of  Stock,  (d)  Railway  bonds. 

8.  Under  what  circumstances,  if  any, 
would  it  be  proper  to  open  an  account  with 
Good  Will?     On  finding  a  Good  Will  Ac- 
count on  the    Ledger  of  a    business    for 
which  you  are  to  prepare  an  account  state- 


Georgia  C.  P.  A.  Examinations          65 

ment,  how  would  you  treat  the  account,  or 
what  special  adjustment  would  you  sug- 
gest in  regard  to  it? 

9.  Acting  as  an  auditor  of  a  manufac- 
turing company,  state  briefly  the  essential 
points  to  be  considered  in  ascertaining  the 
correct  profits  so  far  as  the  inventories 
are  concerned. 

10.  If  a  company,  duly  organized,  ac- 
quires several  plants  that  are  found  to  be 
in  a  "run  down"  condition  and  to  require 
extensive  outlay  for  repairs  and  renewals 
to  bring  them  to  the  required  state  of  effi- 
ciency, should     such  outlay  be     charged 
against  Capital  or  against  Revenue  ?    Give 
reasons. 


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